The 2010 Human Development Report introduced an Inequality-adjusted Human Development Index (IHDI). While the simple HDI remains useful, it stated that "the IHDI is the actual level of human development (accounting for inequality)", and "the HDI can be viewed as an index of 'potential' human development (or the maximum IHDI that could be achieved if there were no inequality)". The index does not take into account several factors, such as the net wealth per capita or the relative quality of goods in a country. This situation tends to lower the ranking for some of the most advanced countries, such as the G7 members and others.[3]

The index is based on the human development approach, developed by ul Haq, often framed in terms of whether people are able to "be" and "do" desirable things in life. Examples include—Being: well fed, sheltered, healthy; Doings: work, education, voting, participating in community life. The freedom of choice is central—someone choosing to be hungry (as during a religious fast) is quite different from someone who is hungry because they cannot afford to buy food, or because the country is in a famine.[4]

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The origins of the HDI are found in the annual Human Development Reports produced by the Human Development Report Office of the United Nations Development Programme (UNDP). These were devised and launched by Pakistani economist Mahbub ul Haq in 1990, and had the explicit purpose "to shift the focus of development economics from national income accounting to people-centered policies". To produce the Human Development Reports, Mahbub ul Haq formed a group of development economists including Paul Streeten, Frances Stewart, Gustav Ranis, Keith Griffin, Farhan C.M, Sudhir Anand, and Meghnad Desai. Nobel laureate Amartya Sen utilized Haq's work in his own work on human capabilities.[2] Haq believed that a simple composite measure of human development was needed to convince the public, academics, and politicians that they can and should evaluate development not only by economic advances but also improvements in human well-being.

The formula defining the HDI is promulgated by the United Nations Development Programme (UNDP).[11] In general, to transform a raw variable, say x{\displaystyle x}, into a unit-free index between 0 and 1 (which allows different indices to be added together), the following formula is used:

x index=x−ab−a{\displaystyle x{\text{ index}}={\frac {x-a}{b-a}}}

where a{\displaystyle a} and b{\displaystyle b} are the lowest and highest values the variable x{\displaystyle x} can attain, respectively.

The Human Development Index (HDI) then represents the uniformly weighted sum with ​1⁄3 contributed by each of the following factor indices:

The 2018 Human Development Report by the United Nations Development Programme was released on 14 September 2018, and calculates HDI values based on estimates for 2017.[12] Below is the list of the "very high human development" countries:[12]

The 2016 Human Development Report by the United Nations Development Programme was released on 21 March 2017, and calculates HDI values based on estimates for 2015. Below is the list of the "very high human development" countries:[14]

The 2015 Human Development Report by the United Nations Development Programme was released on 14 December 2015, and calculates HDI values based on estimates for 2014. Below is the list of the "very high human development" countries:[17][18][19]

The Inequality-adjusted Human Development Index (IHDI)[17] is a "measure of the average level of human development of people in a society once inequality is taken into account".

Note: The green arrows (), red arrows (), and blue dashes () represent changes in rank. The rankings are not relative to the HDI list above due to the exclusion of countries which are missing IHDI data (p. 216).

The 2014 Human Development Report by the United Nations Development Programme was released on 24 July 2014 and calculates HDI values based on estimates for 2013. Below is the list of the "very high human development" countries or regions:[23][18][19]

The Inequality-adjusted Human Development Index (IHDI)[23] is a "measure of the average level of human development of people in a society once inequality is taken into account".

Note: The green arrows (), red arrows (), and blue dashes () represent changes in rank. The rankings are not relative to the HDI list above due to the exclusion of countries which are missing IHDI data (p. 168).

The list below displays the top-ranked country from each year of the Human Development Index. Norway has been ranked the highest fourteen times, Canada eight times, and Japan three times. Iceland has been ranked highest twice.

The Human Development Index has been criticized on a number of grounds, including alleged lack of consideration of technological development or contributions to the human civilization, focusing exclusively on national performance and ranking, lack of attention to development from a global perspective, measurement error of the underlying statistics, and on the UNDP's changes in formula which can lead to severe misclassification in the categorisation of 'low', 'medium', 'high' or 'very high' human development countries.[27]

Economists Hendrik Wolff, Howard Chong and Maximilian Auffhammer discuss the HDI from the perspective of data error in the underlying health, education and income statistics used to construct the HDI. They identified three sources of data error which are due to (i) data updating, (ii) formula revisions and (iii) thresholds to classify a country's development status and conclude that 11%, 21% and 34% of all countries can be interpreted as currently misclassified in the development bins due to the three sources of data error, respectively. The authors suggest that the United Nations should discontinue the practice of classifying countries into development bins because: the cut-off values seem arbitrary, can provide incentives for strategic behavior in reporting official statistics, and have the potential to misguide politicians, investors, charity donors and the public who use the HDI at large.[27]

In 2010, the UNDP reacted to the criticism and updated the thresholds to classify nations as low, medium, and high human development countries. In a comment to The Economist in early January 2011, the Human Development Report Office responded[28] to a 6 January 2011 article in the magazine[29] which discusses the Wolff et al. paper. The Human Development Report Office states that they undertook a systematic revision of the methods used for the calculation of the HDI, and that the new methodology directly addresses the critique by Wolff et al. in that it generates a system for continuously updating the human-development categories whenever formula or data revisions take place.

In 2013, Salvatore Monni and Alessandro Spaventa emphasized that in the debate of GDP versus HDI, it is often forgotten that these are both external indicators that prioritize different benchmarks upon which the quantification of societal welfare can be predicated. The larger question is whether it is possible to shift the focus of policy from a battle between competing paradigms to a mechanism for eliciting information on well-being directly from the population.[30]

^(ESYI is a calculation of the number of years a child is expected to attend school, or university, including the years spent on repetition. It is the sum of the age-specific enrollment ratios for primary, secondary, post-secondary non-tertiary and tertiary education and is calculated assuming the prevailing patterns of age-specific enrollment rates were to stay the same throughout the child's life. Expected years of schooling is capped at 18 years. (Source: UNESCO Institute for Statistics (2010). Correspondence on education indicators. March. Montreal.)

^ abTaiwan's government calculated its HDI to be 0.882, based on 2010 new methodology of UNDP. "2011中華民國人類發展指數 (HDI)"(PDF) (in Chinese). Directorate General of Budget, Accounting and Statistics, Executive Yuan, R.O.C. 2011. Retrieved 21 November 2011.

^ abThe UN does not recognize the Republic of China (Taiwan) as a sovereign state. The HDI report does not include Taiwan as part of the People's Republic of China when calculating China's figures. Taiwan's government calculated its HDI to be 0.882, based on 2010 new methodology of UNDP. "2011中華民國人類發展指數 (HDI)"(PDF) (in Chinese). Directorate General of Budget, Accounting and Statistics, Executive Yuan, R.O.C. 2011. Retrieved 21 November 2011.